bubble sitters -- appreciation may have peaked
Washington, D.C. The D.C.
market ranks 10th on John Burns' list of markets facing
a potential housing bubble, and home sellers in the
metro market report that it's taking longer to sell
than it did a year ago. Plus, builders are offering
significant incentives to try to move inventory quickly.
Fortune's survey suggests the market will decline slightly
in 2007. Still, D.C. has a healthy economy and job market;
Forbes ranks it fourth on its list great places for
business and a career. And where there is business,
there are home buyers.
Fort Myers/Cape Coral,
Fla. Is it overvalued? Yes. Local Market Monitor
reports annual housing appreciation of between 9 percent
and 11 percent between 2001 and 2004 and then a 33 percent
leap in 2005. Has the market topped out in housing appreciation?
Not yet, but it can't absorb much more, say the real
estate gurus. The market is still affordable and more
reasonably priced than Sarasota (43 percent overvalued)
to the north or Naples (a whopping 72 percent overvalued)
to the south, but the amount of building in the market
is staggering -- most of the country's major builders
have strong presences in Lee County -- and land prices,
once quite affordable, have increased as much as tenfold
in recent years.
Midwest hasn't had the kind of dramatic price increases
as cities on the two coasts and those in the Sun Belt.
As such, Chicago isn't as susceptible to a pricing bubble
as some of the other major urban areas of the country,
the real estate pros say. However, the ratio of housing
costs to income in the market far exceeds that of other
markets in the state and job growth has been sluggish.
"The big challenge in Chicago is work-force housing,"
Gollis says. "We're always looking at likely income
growth and affordability growth or lack thereof."
Because of its remote location, Honolulu is tough to
compare to anywhere else. After a drop-off in population
in the 1990s, people have started returning to the island,
Winzer says, creating a housing shortage that has contributed
to rapid increases in housing prices. In 2003, the median
price of an existing single-family home was $380,000,
according to NAR. By end of the 2005, it was expected
to be at $620,000. Currently, the economy on the island
is good, Winzer says, driven by economic conditions
in Japan. Fortune predicts a small, but realistic increase
in values this year followed by a slight drop-off in
Tucson's housing market is dwarfed by Phoenix -- new
construction in Tucson is roughly one-fifth of the number
of units built annually in Phoenix -- but it has joined
its much larger neighbor in attracting the attention
of real estate investors. The NAR reported a 32-percent
increase in appreciation over 12 months. The current
pricing is about one-fourth higher than it should be,
Local Market Monitor says. The pros look for the market
to stabilize in 2006, with an increase that roughly
tracks the inflation rate, increase this year, followed
by a decline in pricing in 2007.